GDI sees water unit making a bigger splash
Guangdong Investment (GDI), the Hong Kong-listed unit of the provincial government, expects growth at its water supply business to surpass last year's pace on the back of rising domestic demand.
'Even if the pace of economic growth slows, demand continues to rise because more and more people want to use clean water,' Li Wenyue, chairman of Guangdong Investment, said yesterday.
Revenue generated from the company's water supply business, Dongshen Water, in Dongguan and Shenzhen rose about 30 per cent. The company also supplies water to Hong Kong.
Operating profit was $830 million last year and overall net profit was $1.149 billion.
It supplied 1.98 billion cubic metres of water to the three cities last year.
The company has a capacity of 2.4 billion cubic metres.
Foreign interest in the mainland's fledging water supply business is rising.
More than 20 overseas companies are investing about US$60 billion in about 50 projects throughout the country, according to official figures.
Besides GDI, Shanghai Industrial Holdings, Citic Pacific, NWS Holdings and Veolia Environment have all taken stakes in mainland water-supply projects.
While Dongshen Water is considered a cash cow for Guangdong Investment, its power plants suffered an operating loss of $31 million last year due to the surging price of coal, according to a recent report from UBS Securities Research Asia.
This compared with an operating profit of $101 million the year before.
Mr Li said GDI would keep searching for new infrastructure projects that offered 'low risk and deliver steady returns'.
'We are also very cautious about our potential partners ... they have to have integrity,' he added.
